ECB Rate Cut Speculation Influences Euro Zone Bond Yields

Euro zone bond yields saw minimal changes after two previous sessions of declines. Investors are anticipating more rate cuts from the European Central Bank due to weak economic data and falling U.S. consumer confidence. Germany's and Italy's bond yields saw slight increases, while concerns rise over French yields due to budget deficit worries.

Euro zone bond yields experienced limited fluctuations on Wednesday after declining over the previous two sessions, driven by investor anticipation of further rate cuts from the European Central Bank (ECB). This sentiment stemmed from weak European economic surveys, a pessimistic German business morale report, and a drop in U.S. consumer confidence, fortifying expectations for an ECB rate cut in October following two earlier 25 basis point cuts this year.

Germany's 10-year bond yield, which functions as the benchmark for the euro zone, increased by 0.5 basis points to 2.14%, after dropping 9 basis points over the past two sessions. Bond yields and prices move inversely. Italy's 10-year yield also saw a small rise of 0.3 basis points to 3.48%, while the yield spread between Italian and German bonds stood at 133 basis points.

Investor attention has also been drawn to French bond yields, which surpassed Spain's for the first time since 2008 due to skepticism regarding the new government's capability to manage the budget deficit. The spread between French and German 10-year yields reached 77 basis points, rising from approximately 70 basis points two weeks ago, and briefly hit its highest level since 2012 above 85 basis points during France's parliamentary elections.

(With inputs from agencies.)